Sei sulla pagina 1di 14


Lesson 1 – Week 1
Part 1 - Origin and Nature of Entrepreneurship

1. Definition

Entrepreneurship – the economic activity of a person who starts, manages, and

assumes risks of a business enterprise.

Entrepreneur – the person who undertakes entrepreneurial tasks.

History of Entrepreneurship

Entrepreneurship, in general, started during the dawn of civilization, when one

artisan trades one of his crafts for another item during the age of barter system or
trades his craft for gold coins when coinage replaced the barter system.

This system went unchanged up until the Middle Ages, when banking was
considered another form of entrepreneurship, wherein bankers would lend kings
and clergymen funds for their projects.


2. The Filipino Entrepreneur

A profile of Filipino entrepreneurs: Philippine Daily Inquirer / 11:38 PM July 07,


Filipinos do have a flair for business, judging from data from the Department of
Trade and Industry. According to the DTI, 99.6 percent of registered businesses
in the Philippines are micro, small and medium enterprises (MSMEs) and these
provide 63.2 percent of total jobs in the country.

“Our Filipino entrepreneurs contribute so much to the country’s economy and

provide the livelihood of most of our workforce. This is why our micro, small and
medium entrepreneurs need and deserve all the support they can get,” says
Manny Aligada, Head of Corporate and SME Segments, Globe Business.

Attributes of the Filipino Entrepreneur

According to Aligada, Globe Business went through a lot of research in order to

tailor its solutions to the needs of the Filipino entrepreneur. In the course of that
research, the group discovered some traits and qualities that make Filipinos good

Here are some of Globe Business’ insights into the character of the Filipino

a. Practicality and common sense. The most successful Filipino

entrepreneurs are not necessarily those who have the best education, or
have an impressive academic record. Some of them, in fact, never even
finished grade school. So how come they are now successful businessmen?

“Filipino entrepreneurs have what we might call street-smarts and a great

deal of common sense. They are practical thinkers. They make decisions
based on what they know about human nature from experience. They are not
only able to come up with good products but, more importantly, they know
how to relate to their customers and give what their customers want. You
really cannot learn such skills from a book or in a classroom.

“This is practical knowledge that you gain by relating to actual customers and
trying your own hand at a business. In other words, entrepreneurs develop
their street-smarts and sharpen their common sense through experience.
They learn from both their successes and their mistakes. That’s what makes
them effective entrepreneurs,” Aligada says.

Filipino entrepreneurs are also practical when it comes to money. They make
sure that they get maximum profit for the lowest possible cost.

b. Passionate about business. When a Filipino entrepreneur decides on what

business he will establish, usually it will be related to something he or she is
passionate about. This passion drives him to learn everything possible about
the products or services he is offering to customers. The same passion also
gives the Filipino entrepreneur a strong commitment and involvement in his

“Filipino entrepreneurs are all in business to earn for themselves and their
families. However, the most successful ones have the passion that fuels their
minds, emotions and bodies to make the business grow. This passion
reaches the point where the business in no longer just about the bottom line;
the business itself brings fulfillment and happiness to the entrepreneur. This
proves that if one is passionate about one’s enterprise, then one will find the
resources to make it successful for its own sake,” says Aligada.

c. Confident and self-reliant. The Filipino entrepreneur is always hands-on

and self-reliant. When he is just starting out his business, he is practically
able to do everything involved in running it-from finding the best suppliers to
renting the place of business, to the marketing, selling and customer
relations, and even accounting.

All this would not be possible without the entrepreneur’s supreme confidence
in himself or herself.

Filipino entrepreneurs trust their own judgment and their own capacity to run
their businesses. They are able to take calculated or even daring, seemingly
unwise, risks. They know that while they can get the best advice, the best
research, ultimately, the success of the business depends on their own

d. Hard-working and goal-oriented. No one can doubt how hardworking the

Filipino entrepreneur is. His involvement in his business is nearly absolute, to
the point that his personal time for himself and his loved ones is
compromised. He is also goal-oriented, and has the discipline to set smaller
goals that he will accomplish in order to meet his final objective.

e. A leader and an innovator. The most successful Filipino entrepreneurs have

excellent leadership skills. He is able to convince and influence his
employees and his customers positively. He is also able to innovate-to come
up with novel solutions when a challenging situation arises.

f. Value-oriented. Finally, the Filipino entrepreneur has a set of values that

guides him in doing business. The greatest value for a Filipino entrepreneur is
his family.

“In general, a Filipino entrepreneur, no matter how successful he has

become, never loses sight of why he is striving to make his business thrive
and grow—he is doing it for the well-being of his family,” says Aligada.

3. Entrepreneurship and Philippine education

Entrepreneurship education is a new field that should be formally developed in

the Philippines. Universities should focus on entrepreneurship education that will
cater to high growth-high opportunity entrepreneurship. This can be done through
the collaboration of the academe, industry, and the government.

An interdisciplinary approach should be set in place that will enhance the

collaboration of business, science, and technology programs. Universities should
adapt a new set of policies on faculty remuneration, working conditions (balance
between teaching and research hours), entrepreneurship research focus, and
entrepreneurial development. The creation of a new entity that will help in the
start-up and incubation of the business will help in developing entrepreneurial
skills of students, teachers, and staff.

The government should encourage the formation of business incubators within

the university system supported by legislation. The science parks or
entrepreneurship centers should be a collaborative effort of different universities
who are considered centers of excellence in business and entrepreneurship.
Universities should be grouped together as a consortium to fully utilize resources.
In this way, they will not be burdened with high financial costs since expenditures
can be shared.

Entrepreneurship education will transform a university into an entrepreneurial

university. However, this is not an easy task, especially for universities that are
still struggling to build a culture of research among its faculty and students.
Collaboration among business, science, and engineering programs should be
done to support the start-up and growth of high growth and high opportunity
business venture.

The programs and innovations needed to form an entrepreneurial university will

create a new breed of faculty called academic entrepreneurs. An academic
entrepreneur is a faculty who commercializes products of high growth-high
opportunity in collaboration with their students and the industry. Faculty members
should be recognized based on the academic entrepreneur’s contribution to the
growth and development of their academic discipline.

New policies and guidelines should be developed through legislation to support

the promotion of entrepreneurial universities. Success of entrepreneurship
education takes time. Every stakeholder should be willing to invest time for this
undertaking. The zeal and support of the members of the academe
environmental conditions set by government policy and legislation and the
collaboration of the academe, industry, and government will determine the
success of entrepreneurship education in the Philippines

4. Social and Economic Contributions of Entrepreneurship

a. Entrepreneurship creates employment

b. Entrepreneurship improves the quality of life
c. Entrepreneurship is contributing to more equitable distribution of income
taxes and therefore eases social unrest.
d. Entrepreneurship utilizes and mobilizes resources for greater national
e. Entrepreneurship brings social benefits through the government

Lesson 1 – Week 1

Part 2 – Generating Business Ideas

The Search for a Sound Business Idea

Sound Business Idea – an economic opportunity which is within reach of the

entrepreneur and which will provide him with a desirable value.

Creativity – the reorganization of experiences into new configurations.

This has an important role in the formulation of a sound business idea.

The Creative Process

1. Preparation – the collection of two or more large bodies of information that

become associated with new and unique ways is undertaken.

2. Incubation – the creative person relaxes and withdraws from the intense
preparation period. It means getting out of the situation and observing it at a
distance after sufficiently relaxing.

3. Insight – this occurs when the creative individual discovers new associations and
patterns which provide a useful solution to a problem.

4. Verification – involves testing, refining, demonstrating and communicating the

creative ideas during the insight phase

The phases sometimes overlap. For instance, insights may happen during the
preparation period/

The Elements of Creativity

1. Drive – the motivation or willingness to repeat a process until the answer to a

problem is obtained. Successful inventors did not succeed in their first try.

2. Fluency – the ability of the creative person to come up with a lot of ideas
regarding the problem under consideration. Example “how one will cross a
certain river”. boat, swim, bridge. etc.

3. Flexibility – thinking beyond a certain category idea. Example catching fish with
electricity powered by battery beyond the usual net.

4. Originality – ability to consider the use of unusual and rare ideas. The use of
sealants, before GI roofs are replaced even with only a hole in it.

5. Awareness – the ability to see unusual connections between objects and things.
Ex. Laser treatment. Internet

Types of Innovations

1. Product Innovation – refers to new products or services as well as improvements

of old products or services.

2. Process Innovation – refers to the improvement of processes in the organization

3. Marketing Innovation – refers to the improvements in the marketing functions of

promotion, pricing, distribution, packaging and advertising.

Lesson 1 – Week 1

Part 3 – Recognizing, Assessing, and Exploiting Opportunities

Opportunity Recognition Process

Opportunity – is “a situation or occasion that makes it possible to do something that

you want to do”.

In business perspective:

Opportunity – is “an exploitable set of circumstances with uncertain outcome requiring a

commitment of resources and involving exposure to risks”.

Three elements:

a. You want to do something: (establish a business)

b. There are conditions for realization of the objective.
c. You must make decisions or take actions on these conditions to realize
your objective.

5 Stages of opportunity recognition:

1. Precondition. A preparatory stage where an individual assesses his knowledge of

the market.
2. Conception. The gestation phase, where entrepreneurial intentions and ideas are
generated, using logic, creative thinking, or both.
3. Visioning. This stage provides the individual the hunch that can serve as
opportunity for business.
4. Assessment. This stage involves the evaluation on whether the idea can be
realized or not.
5. Realization. The phase that suggests the production of a prototype.

Factors in Opportunity recognition:

a. Market awareness - (prior knowledge of the market). Refers to personal

knowledge of the market and its components, including customers and suppliers.
b. Entrepreneurial readiness – (entrepreneurial alertness). Refers to a variety of
features of an individual to start a business venture.
c. Connections – (networks). Refers diversity of networks, families, friends as well
as business associates that can bring about opportunities.

Opportunity Assessment

This refers to the process of evaluating the likelihood that the opportunity can be

Elements in opportunity assessment:

 Product or service: What are the potentials of the product or service?

 Market opportunity: appraisal of the characteristics of the market. Competitive
environment. Market entry problems. Target market.
 Costing and price: product may be valuable but may not be affordable to
consumers. Considers the costs.
 Profitability: the extent of profitability of the product or service.
 Resource requirements. Availability and accessibility of inputs in the production
 Risks. Uncertain situations that can increase the probability of loss or failure of
the business.
 Entrepreneurial commitments. The commitment of the person to pursue the
realization of its business idea.


Lesson 2 – Week 2
Development of a Business Plan

1. Principles of Planning

Planning is the process of setting objectives to be accomplished by an

organization during a future time period and deciding on methods of reaching

The Need to Plan (why do we have to plan?)

 Everything is constantly changing.

 Planning by its very nature helps to achieve goals.
 Planning provides for effective utilization of resources – men, machines,
materials, and methods. The best use is made of what is available.
 Planning can help a manager attain confident leadership.
 The proper use of planning function provides the manager better sense of
direction and enables him to exercise a greater degree of control over the future.

Three Major Activities of Planning Function

1. Appraise the present position.

2. Set objectives.
3. Develop a set of plans to achieve these objectives.

A. Appraising the Present

To design an effective plan, it is necessary to obtain necessary all available

pertinent facts, face the facts, and in the plan include the action that the facts

After the complete appraisal, the Manager should have three clear concepts in

 Know where his organization stands and its relative position among the
 Problem areas and potential problem areas should be more clearly defined.
 Profit opportunities should present themselves.

B. Setting Objectives

Objectives are clear cut and carefully considered statements designed to give
an organization and its member’s direction and purpose.

Characteristics of Effective Objectives:

1. Specific
2. Practical
3. Quantifiable and Measurable

Setting Objectives:

The process of setting objectives is the most difficult part of the manager’s job.
It requires clear thinking. Only by setting clearly defined objectives can the manager
really measure the progress he and his organization are making.

The managerial objectives he sets normally fall into one of four categories:

1. Profitability: this can be expressed in terms of profits, return on investments, or

earnings per share. Example. To increase ROI to 18 % after taxes by April 15,

2. Customer Service: this can be expressed in very explicit terms. Example: to

reduce the number of customer complaints by 40% by December 31, 2012.

3. Employee-Management Needs and Well Being: This may be quantitatively

expressed in terms of number of grievances, training, etc. Example: to conduct a
20-hour training program on human relations for 150 employees by March 31,
2012 at a cost not to exceed P2, 500.00 per participant.

4. Social Responsibility: this may be expressed in types of activities, number of

days of service or financial contributions. Example: to hire minorities by May 1,

C. Developing the Plan

After setting objectives, the manager must develop a series of plans to meet them.
Such plans may be growth, profit, user or personnel-management plans and may be
long-range or short range.

Key Steps in Developing the Plan:

1. Come up with a clear and concise statement of objectives or problems.

2. Classify the objectives or problems according to importance.

3. Consider all the facts related to the objectives or problems.

4. Develop alternative courses of action from which to choose.

5. Evaluate the advantages and disadvantages of each course of action.

6. Select the best alternative. Cost, adaptability, efficiency, custom and personal
preference are given top priority in making the final choice.

7. Follow-up to compare actual with expected results.

8. Determine whether the plan has proved satisfactory or whether change or a new
plan is needed.

For plans to be effective, they should meet certain stipulations. Among the most
important are:

a. Make the plan easy to understand. It should be clearly illustrated and should
provide pertinent examples.

b. Feature full coverage of needed activities required to attain the objectives.

c. Reduce the plan to a simple series of actions.

d. Keep the planned efforts on schedule, assigning of time periods gives vitality and
practical meaning to a plan.

e. Coordinate the separate activities within the plan.

f. Keep the plan flexible to permit adjustment. It should not be so rigid that
individual initiative is stifled.

g. Insure acceptance of the plan by all concerned or affected by it. Point out its
advantages to each of the adopters.

h. Fulfill a recognized need which is within the capability of the management team.

i. Show clearly the respective responsibility and authority required for each group
or individual, as well as the relationships among the participants in the plan.


Concepts of Business Planning

Great business leaders understand that the concept of planning your business
strategies, marketing and execution help create a clear roadmap for success.

It is possible to succeed without in-depth planning, but for most companies, the
business plan serves as the foundation of what the company will do, how it will
get that done and where it will find profit. These concepts of business planning
assist leaders in identifying opportunities as well as any obstacles to success.

Business Plan Definition

 The business plan is a document describing what a business does, who

the key players are in the company, the market it serves and the financial
model that leads to profits.

 At its core, it is a roadmap about how the business will do what says it will
do. Although the business plan serves as the roadmap and foundation,
business planning doesn't stop when the business plan is finished.

 It is a fluid document that needs to be adjusted for changes in key

management, marketing, industry trends and demographic information.

Importance of Business Plans:

Business plans are important because:

 It helps determine whether a proposed or existing business is viable given

its target market
 It guides the entrepreneur in mobilizing resources needed by the business
 It serves as a tool in helping get financing for the business

The business plan may be read by:

- Employees
- Suppliers
- Customers
- Financiers
- Potential investors

Information Needs for Major Sections of the Business Plan

Market Information Needs

 General environment trends

 Specific industry needs
 Local market conditions
 Market potential (untapped market, market size)
 Demographic and/or psychographic profile of the target market

Operations Information Needs

 Location
 Manufacturing or service operations
 Equipment/furniture needed
 Space requirements
 Labor requirements
 Raw materials needed and potential suppliers
 Utilities (water, energy requirements)

Financial information needs

 Rents
 Cost of equipment
 Cost of utilities
 Personnel costs
 Distribution costs
 Cost of insurance
 Registration and license fees

Major Sections of a Business Plan

I. Introductory page
II. Executive Summary
III. Environment and industrial analysis
IV. Description of the business
V. Production plan
VI. Operation plan
VII. Marketing plan
VIII. Organizational plan
IX. Financial plan
X. Assessment of Risks
XI. Timetable and Milestones
XII. Appendices

I. Introductory Page

This cover page provides a brief summary of the business plan’s content. It must
contain the following:

 Business Name and Address

 Name and Addresses of Business Owners
 Nature of Business
 Statement of financing

II. Executive Summary

The executive summary is a short overview of the entire business plan. It provides a
busy reader w/ everything that needs to be known about the venture's distinctive nature.
An executive summary shouldn't exceed two single-spaced pages. Even though the
executive summary appears at the beginning of the business plan, it should be written

Key questions that the business plan must answer include:

 What is the basic idea for the new product/service? What makes it unique?
 How will the idea of the new proposed business be realized?
 Is he potential market big enough to make the business viable?
 How much revenue and income is the business expected to generate?
 Who are the people behind the business? Do they have the knowledge, skills,
experience required to develop the product or service idea and to run the
proposed business?

III. Environment and Industrial Analysis

It is important to describe the general conditions within the business will operate. These
environmental factors include:

General Environment Conditions

 PEST Analysis: Politico-legal, Economic, Sociocultural, Technological

o Politico-legal conditions: this must take into account existing laws and
regulations as well as future legislations at may affect the business. (ex.
Minimum wage, labor laws, health and safety, tax laws, government
incentives for MSMEs).

o Economic conditions: this include the description of growth of both

national and local economies as measure by the Gross Domestic Product
GDP; price movements of business inputs, inflation rates, interest rates,
foreign exchange, employment trends, and disposable income.

o Sociocultural conditions: among others, this include the description of

shifts in the characteristics of the population (demographics), rise of
Filipino middle class, growing elderly population, lifestyle trends, including
shift in consumer preferences and demand for greener products and

o Technological conditions: this must include an assessment of the major

development in science and technology that might have either beneficial
or detrimental impact on the business of the entire industry. Example are

the rise in e-commerce have greatly influenced various industries such as
retail, wholesale, tourism, banking and communications.

Specific Environment Conditions

 Supply and Demand; it is important to know whether the proposed business

venture belongs to an industry that is rapidly growing (sunrise industry), steadily
growing, or rapidly declining (sunset industry). Are there demands for the product
or service? Are the supplies/suppliers enough to meet these demands?

 Competition: there are always threat from a competitor who has the resources to
come up with a similar, or even better product at a much lower price. It is
essential to “know the enemy” (their products, their customers, their strengths
and weaknesses) so that we can execute the right competitive strategy.

IV. Description of the Business

This section must include the following:

o Mission and Vision, Core values that will serve as a guide in decision-
o Product and Services offered by the company
o Size of the Business: what form of business
o Location of business and major physical assets: include the choice of the
location, accessibility, visibility, etc.
o Background of owners and managers.

V. Production Plan

If the new venture is a manufacturing concern, the entrepreneur must prepare a

production plan that will describe the whole manufacturing process. This include:

 Manufacturing Process
 Physical plant layouts
 Machinery and Equipment
 Suppliers of Raw Materials
 Future Capital Equipment

VI. Operation Plan

An operations plan must be include whether the business in manufacturing of

service concern.

For manufacturing describe:

- The flow of goods and services from production to customer (including

purchasing, inventory of raw materials and finished goods, inventory
control procedures and distribution.)

For service business describe:

- The procedures in competing a business transaction.

VII. Marketing Plan

This section describes the target market for the new product or service.

 Who will buy, use or avail the product or service?

 Why should they want to do so?

Once the target market is defined, describe how the product/service will be:

 Price (Pricing)
 Promoted (Promotion)
 Distributed (Distribution)

The Sales Forecast must be included in this section to provide an indication of

the viability of the business.

VII. Organizational Plan

This section should provide a documentation of the venture’s:

 Form of ownership (sole proprietorship, partnership, corporation)

 Organizational chart (indicating positions and job descriptions)
 Background of the management team (competence, character, experience,
 Roles and Responsibilities of the Management Team

VIII. Financial Plan

This section determines the investment that must be put into business and
indicates whether the business is an economically viable undertaking.

1. The financial plan must provide a summary of the projected assets and
liabilities, expected investment and potential retained earnings. These are
summarized in a Pro forma Balance Sheet: The projected balance sheet
will enable lenders and investors whether financial ratios are within
acceptable limits and will justify initial and future funding for the company.

2. The financial plan must summarize the projected sales, the cost of goods
sold. And the general and administrative expenses for at least the first
three years. Such information, including the net income taxes are shown
in a Pro forma Income Statement.

3. The financial plan includes a Cash Flow Statement which shows the
amount and timing of expected inflows and outflows of cash over a period
of several years.

IX. Assessment of Risks

The business plan must contain a section that discusses the risks that might or
prevent the business form achieving its objectives such as:

o Price cutting of competitors

o Operating costs that exceed initial estimates

o Failure to achieve sales forecasts

o Sudden unavailability of or increase in raw material

o Difficulties in raising additional capital
o Advances in technology that might make the product obsolete
o Unforeseen environmental conditions

This section must also include the Strategies for preventing/minimizing risks and
the Response to risks should they occur.

XI. Timetable and Milestones

This section can be presented by means of a chart (Gantt) this may include the:

 Formal registration of business

 Completion of product or service design
 Completion of prototype
 Hiring of initial personnel
 Reaching agreements with suppliers and distributors
 Actual production
 Initial orders, sales, and deliveries

XII. Appendices

To ensure the main body of the business plan is concise enough to include
essential information several items are appended to the document. This includes:

 Market research data

 Detailed financial projections
 Curriculum vitae of the management team
 Price lists from suppliers
 Profile of competitors

WRITING THE BUSINESS PLAN: 3 rules for writing a business plan:

1. Keep it short:

Business plans should be short and concise. Reasons:

First, you want your business plan to be read (and no one is going to read a 100-
page or even 40-page business plan).

Second, your business plan should be a tool you use to run and grow your
business, something you continue to use and refine over time. An excessively
long business plan is a huge hassle to revise—you’re almost guaranteed that
your plan will be relegated to a desk drawer, never to be seen again.

2. Know your audience:

Write your plan using language that your audience will understand.

For example, if your company is developing a complex scientific process, but

your prospective investors aren’t scientists, avoid jargon, or acronyms that won’t
be familiar.

Accommodate your investors, and keep explanations of your product simple and
direct, using terms that everyone can understand. You can always use the
appendix of your plan to provide the full specs if needed.

3. Don’t be intimidated:

The vast majority of business owners and entrepreneurs aren’t business experts.
Just like you, they’re learning as they go and don’t have degrees in business.

Writing a business plan may seem like a big hurdle, but it doesn’t have to be. You don’t
have to start with the full, detailed business.

In fact, it can be much easier to start with a simple, one-page business plan - and then
come back and build a slightly longer, more detailed business plan later.

How to Present the Business Plan? Guidelines in presenting your business plan:

 Tell a compelling story: the goal is to persuade and not to overwhelm your
audience with figures and facts. Select the best information that will best support
your major points. Use simple words.
 Exhibit confidence and professionalism: prepare well and rehearse your
presentation. Present in relax and natural manner.
 Cover the basics: set up your equipment ahead of time and cover the
fundamental elements.
 Adopt a cooperative attitude when answering questions. Try to answer questions
as best as you can no matter how tough.